THE DEPOSITORIES ACT, 1996 
_________ 

ARRANGEMENT OF SECTIONS 
__________ 

CHAPTER I 

PRELIMINARY 

SECTIONS 

1.  Short title, extent and commencement. 
2.  Definitions. 

CHAPTER II 

CERTIFICATE OF COMMENCEMENT OF BUSINESS 

3.  Certificate of commencement of business by depositories. 

RIGHTS AND OBLIGATIONS OF DEPOSITORIES, PARTICIPANTS, ISSUERS AND BENEFICIAL OWNERS 

CHAPTER III 

4.  Agreement between depository and participant. 
5.  Services of depository. 
6.  Surrender of certificate of security. 
7.  Registration of transfer of securities with depository. 
8.  Options to receive security certificate or hold securities with depository. 
9.  Securities in depositories to be in fungible form. 
10.  Rights of depositories and beneficial owner. 
11.  Register of beneficial owner. 
12.  Pledge or hypothecation of securities held in a depository. 
13.  Furnishing of information and records by depository and issuer. 
14.  Option to opt out in respect of any security. 
15.  Act 18 of 1891 to apply to depositories. 
16.  Depositories to indemnify loss in certain cases. 
17.  Rights and obligations of depositories, etc. 

CHAPTER IV 

ENQUIRY AND INSPECTION 

18.  Power of Board to call for information and enquiry. 
19.  Power of Board to give directions in certain cases. 
19A. Penalty for failure to furnish information, return, etc. 
19B. Penalty for failure to enter into an agreement. 
19C. Penalty for failure to redress investors‟ grievances. 
19D. Penalty for delay in dematerialisation or issue of certificate of securities. 
19E. Penalty for failure to reconcile records. 
19F. Penalty for failure to comply with directions issued by Board under section 19 of the Act. 
19FA. Penalty for conduct business in a fair manner. 
19G. Penalty for contravention where no separate penalty has been provided. 
19H. Power to adjudicate. 
19-I. Factors to be taken into while adjudging quantum of penalty. 

1 

 
 
 
SECTIONS 

19-IA. Settlement of Administrative and Civil Proceedings. 
19-IB. Recovery of amounts. 
19-IC. Continuance of proceedings. 
19J. Crediting sums realised by way of penalties to Consolidated Fund of India. 

20. Offences. 
21. Contravention by companies. 

CHAPTER V 

MISCELLANEOUS 

[OMITTED.]. 

22. Cognizance of offences by courts. 
22A. Composition of certain offences.  
22B. Power to grant immunity. 
22C. Establishment of Special Courts. 
22D. Offences triable by Special Courts. 
22E. Appeal and revision.  
22F. Application of Code to proceedings before Special Court. 
22G. Transitional provisions. 
23. Appeals. 
23A. Appeal to Securities Appellate Tribunal. 
23B. Procedure and powers of Securities Appellate Tribunal. 
23C. Right to legal representation. 
23D. Limitation. 
23E. Civil Court not to have jurisdiction. 
23F. Appeal to Supreme Court. 
23G. Powers of Board not to apply to International Financial Services Centre. 
24. Power of Central Government to make rules. 
25. Power of Board to make regulations. 
26. Power of depositories to make bye-laws. 
27. Rules and regulations to be laid before Parliament. 
28. Application of other laws not barred. 
29. Removal of difficulties. 
30. [Repealed.] 
30A. Validation of certain acts. 
31. Repeal and saving. 

THE SCHEDULE. [Repealed.] 

2 

 
 
 
 
 
 
 
 
 
 
 
 
THE DEPOSITORIES ACT, 1996 

ACT NO. 22 OF 1996 

An Act to provide for regulation of depositories in securities and for matters connected therewith 

or incidental thereto. 

BE it enacted by Parliament in the Forty-seventh Year of the Republic of India as follows:— 

[10th August, 1996.] 

CHAPTER I 

PRELIMINARY 

1. Short title, extent and commencement.—(1) This Act may be called the Depositories Act, 1996. 

(2) It extends to the whole of India. 

(3) It shall be deemed to have come into force on the 20th day of September, 1995. 

2. Definitions.—(1) In this Act, unless the context otherwise requires,— 

(a) “beneficial owner” means a person whose name is recorded as such with a depository; 

(b) “Board” means the Securities and Exchange Board of India established under section 3 of the 

Securities and Exchange Board of India Act, 1992 (15 of 1992); 

(c) “bye-laws” means bye-laws made by a depository under section 26; 

(d) “Company Law Board” means the Board of Company Law Administration constituted under 

section 10E of the Companies Act, 1956 (1 of 1956); 

(e)  “depository”  means  a  company  formed  and  registered  under  the  Companies  Act,                        

1956 (1 of 1956) and which has been granted a certificate of registration under sub-section (1A) of 
section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992); 

(f) “issuer” means any person making an issue of securities; 

(g) “participant” means a person registered as such under sub-section  (1A) of section 12 of the 

Securities and Exchange Board of India Act, 1992 (15 of 1992); 

(h) “prescribed” means prescribed by rules made under this Act; 

(i) “record” includes the records maintained in the form of books or stored in a computer or in 

such other form as may be determined by regulations; 

(j)  “registered  owner”  means  a  depository  whose  name  is  entered  as such  in the  register  of  the 

issuer; 

 (k) “regulations” means the regulations made by the Board; 
1[(ka)  “Securities  Appellate  Tribunal”  means  a  Securities  Appellate  Tribunal  established  under 
sub-section (1) of section 15K of the Securities and Exchange Board of India Act, 1992 (15 of 1992);]  

(l) “security” means such security as may be specified by the Board; 

(m) “service” means any service connected with recording of allotment of securities or transfer of 

ownership of securities in the record of a depository. 

(2)  Words  and  expressions  used  herein  and  not  defined  but  defined  in  the  Companies  Act,            

1956 (1  of 1956)  or the  Securities  Contracts (Regulation)  Act,  1956  (42  of  1956)  or the  Securities  and 
Exchange Board of India Act, 1992 (15 of 1992), shall have the meanings respectively assigned to them 
in those Acts. 

1. Ins. by Act 32 of 1999, s. 13 (w.e.f. 16-12-1999). 

3 

 
 
 
                                                           
CHAPTER II 
CERTIFICATE OF COMMENCEMENT OF BUSINESS 

3.  Certificate  of  commencement  of  business  by  depositories.—(1)  No  depository  shall  act  as  a 

depository unless it obtains a certificate of commencement of business from the Board. 

(2)  A  certificate  granted  under  sub-section  (1)  shall  be  in  such  form  as  may  be  specified  by  the 

regulations. 

(3)  The  Board  shall  not  grant  a  certificate  under  sub-section  (1)  unless  it  is  satisfied  that  the 

depository has adequate systems and safeguards to prevent manipulation of records and transactions: 

Provided  that  no  certificate  shall  be  refused  under  this  section  unless the  depository  concerned  has 

been given a reasonable opportunity of being heard. 

CHAPTER III 
RIGHTS AND OBLIGATIONS OF DEPOSITORIES, PARTICIPANTS, ISSUERS AND BENEFICIAL OWNERS 
4. Agreement between depository and participant.—(1) A depository shall enter into an agreement 

with one or more participants as its agent. 

(2) Every agreement under sub-section (1) shall be in such form as may be specified by the bye-laws. 
5. Services of depository.—Any person, through a participant, may enter into an agreement, in such 

form as may be specified by the bye-laws, with any depository for availing its services. 

6. Surrender of certificate of security.—(1) Any person who has entered into an agreement under 
section  5  shall  surrender  the  certificate  of  security,  for  which  he  seeks  to  avail  the  services  of  a 
depository, to the issuer in such manner as may be specified by the regulations. 

(2) The issuer, on receipt of certificate of security under sub-section (1), shall cancel the certificate of 
security and substitute in its records the name of the depository as a registered owner in respect of that 
security and inform the depository accordingly. 

(3) A depository shall, on receipt of information under sub-section (2), enter the name of the person 

referred to in sub-section (1) in its records, as the beneficial owner. 

7. Registration of transfer of securities with depository.—(1) Every depository shall, on receipt of 

intimation from a participant, register the transfer of security in the name of the transferee. 

1[(1A) Every depository on receipt of intimation from a participant register any transfer of security in 
favour of an asset reconstruction company as defined in clause (ba) of sub-section (1) of section 2 of the 
Securitisation  and  Reconstruction  of  Financial  Assets  and  Enforcement  of  Security  Interest  Act,  2002           
(54  of  2002)  along  with  or  consequent  upon  transfer  or  assignment  of  financial  asset  of  any  bank  or 
financial institution under sub-section (1) of section 5 of that Act. 

(1B) Every depository, on receipt of intimation from a participant, register any issue of new shares in 
favour of any bank or financial institution or asset reconstruction company or any other assignee of such 
bank or financial institution or asset reconstruction company, as the case may be, by conversion of part of 
their debt into shares pursuant to reconstruction of debts of the company agreed between the company and 
the bank or financial institution or asset reconstruction company. 

Explanation.—For  the  purpose  of  this  section,  the  expressions  “asset  reconstruction  company”, 

“bank”,  and  “financial  institution”  shall  have  the  meanings  assigned  to  them  respectively  under             
clauses  (ba),  (c)  and  (m)  of  sub-section  (1)  of  section  2  of  the  Securitisation  and  Reconstruction  of 
Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002).] 

(2) If a beneficial owner or a transferee of any security seeks to have custody of such security, the 

depository shall inform the issuer accordingly. 

8.  Options  to  receive  security  certificate  or  hold  securities  with  depository.—(1)  Every  person 
subscribing  to  securities  offered  by  an  issuer  shall  have  the  option  either  to  receive  the  security 
certificates or hold securities with a depository. 

(2) Where a person opts to hold a security with a depository, the issuer shall intimate such depository 
the details of allotment of the security, and on receipt of such information the depository shall enter in its 
records the name of the allottee as the beneficial owner of that security. 

1. Ins. by Act 44 of 2016, s. 44 and the Second Schedule (w.e.f. 1-9-2016). 

4 

 
                                                           
9. Securities in depositories to be in fungible form.—(1) All securities held by a depository shall be 

dematerialised and shall be in a fungible form. 

 1[(2) Nothing contained in sections 153, 153A, 153B, 187B, 187C and 372 of the Companies Act, 
1956 (1 of 1956) shall apply to a depository in respect of securities held by it on behalf of the beneficial 
owners.] 

10.  Rights  of  depositories  and  beneficial  owner.—(1) Notwithstanding anything contained in any 
other  law  for  the  time  being  in  force,  a  depository  shall  be  deemed  to  be  the  registered  owner  for  the 
purposes of effecting transfer of ownership of security on behalf of a beneficial owner. 

(2) Save as otherwise provided in sub-section (1), the depository as a registered owner shall not have 

any voting rights or any other rights in respect of securities held by it. 

(3)  The  beneficial  owner  shall  be  entitled  to  all  the  rights  and  benefits  and  be  subjected  to  all  the 

liabilities in respect of his securities held by a depository. 

11.  Register  of  beneficial  owner.—Every  depository  shall  maintain  a  register  and  an  index  of 

beneficial  owners  in  the  manner  provided  in  sections  150,  151  and  152  of  the  Companies  Act,            
1956 (1 of 1956). 

12.  Pledge  or  hypothecation  of  securities  held  in  a  depository.—(1)  Subject  to such  regulations 
and bye-laws, as may be made in this behalf, a beneficial owner may with the previous approval of the 
depository create a pledge or hypothecation in respect of a security owned by him through a depository. 

(2)  Every  beneficial  owner  shall  give  intimation  of  such  pledge  or  hypothecation  to  the  depository 

and such depository shall thereupon make entries in its records accordingly. 

(3)  Any  entry  in  the records  of a  depository  under  sub-section  (2) shall  be  evidence  of  a  pledge  or 

hypothecation. 

13. Furnishing of information and records by depository and issuer.—(1) Every depository shall 
furnish to the issuer information about the transfer of securities in the name of beneficial owners at such 
intervals and in such manner as may be specified by the bye-laws. 

(2)  Every  issuer  shall  make  available  to  the  depository  copies  of  the  relevant  records  in  respect  of 

securities held by such depository. 

14.  Option  to  opt  out  in  respect  of  any security.—(1) If a beneficial owner seeks to opt out of a 

depository in respect of any security he shall inform the depository accordingly. 

(2) The depository shall on receipt of intimation under sub-section (1) make appropriate entries in its 

records and shall inform the issuer. 

(3)  Every  issuer  shall,  within  thirty  days  of  the  receipt  of  intimation  from  the  depository  and  on 
fulfilment of such conditions and on payment of such fees as may be specified by the regulations, issue 
the certificate of securities to the beneficial owner or the transferee, as the case may be. 

15. Act 18 of 1891 to apply to depositories.—The Bankers‟ Books Evidence Act, 1891 shall apply 

in relation to a depository as if it were a bank as defined in section 2 of that Act. 

16. Depositories to indemnify loss in certain cases.—(1) Without prejudice to the provisions of any 
other law for the time being in force, any loss caused to the beneficial owner due to the negligence of the 
depository or the participant, the depository shall indemnify such beneficial owner. 

(2) Where the loss due to the negligence of the participant under sub-section (1) is indemnified by the 

depository, the depository shall have the right to recover the same from such participant. 

17. Rights and obligations of depositories, etc.—(1) Subject to the provisions of this Act, the rights 
and  obligations  of  the  depositories,  participants  and  the  issuers  whose  securities  are  dealt  with  by  a 
depository shall be specified by the regulations.  

(2)  The  eligibility  criteria  for  admission  of  securities  into  the  depository  shall  be  specified  by  the 

regulations. 

1. Subs. by  Act 8 of 1997, s. 22,  for sub-section (2) (w.e.f. 15-1-1997). 

5 

 
                                                           
CHAPTER IV 
ENQUIRY AND INSPECTION 

18. Power of Board to call for information and enquiry.—(1) The Board, on being satisfied that it 

is necessary in the public interest or in the interest of investors so to do, may, by order in writing,— 

(a)  call  upon  any  issuer,  depository,  participant  or  beneficial  owner  to  furnish  in  writing  such 

information relating to the securities held in a depository as it may require; or 

(b) authorise any person to make an enquiry or inspection in relation to the affairs of the issuer, 
beneficial owner, depository or participant, who shall submit a report of such enquiry or inspection to 
it within such period as may be specified in the order. 
(2) Every director, manager, partner, secretary, officer or employee of the depository or issuer or the 
participant  or  beneficial  owner  shall  on  demand  produce  before  the  person  making  the  enquiry  or 
inspection  all  information  or  such  records  and  other  documents  in  his  custody  having  a  bearing  on  the 
subject matter of such enquiry or inspection. 

19. Power of Board to give directions in certain cases.—1[1] Save as provided in this Act, if after 

making or causing to be made an enquiry or inspection, the Board is satisfied that it is necessary— 

(i) in the interest of investors, or orderly development of securities market; or 
(ii)  to  prevent  the  affairs  of  any  depository  or  participant  being  conducted  in  the  manner 

detrimental to the interests of investors or securities market,  

it may issue such directions— 

(a) to any depository or participant or any person associated with the securities market; or 
(b) to any issuer, 

as may be appropriate in the interest of investors or the securities market. 

2[Explanation.—For the removal of doubts, it is hereby declared that power to issue directions under 
this  section shall include  and always be deemed to have been included the power to direct any person, 
who  made  profit  or  averted  loss  by  indulging  in  any  transaction  or  activity  in  contravention  of  the 
provisions of this Act or regulations made thereunder, to disgorge an amount equivalent to the wrongful 
gain made or loss averted by such contravention.] 

3[(2)  Without  prejudice  to  the  provisions  contained  in  sub-section  (1)  and  section  19H,  the  Board 
may, by order, for reason to be recorded in writing, levy penalty under sections 19A, 19B, 19D, 19E, 19F, 
19FA and 19G after holding an inquiry in the prescribed manner.] 

4[19A. Penalty for failure to furnish information, return, etc.—Any person, who is required under 

this Act or any rules or regulations or bye-laws made thereunder,— 

(a) to furnish any information, document,  books, returns or report to the Board, fails to furnish the same 
within the time specified therefor 5[or who furnishes or files false, incorrect or incomplete information, 
return, report, books or other documents], he shall be liable to a penalty 6[which shall not be less than 
one  lakh  rupees  but  which  may  extend  to  one  lakh  rupees  for  each  day  during  which  such  failure 
continues subject to a maximum of one crore rupees] for each such failure; 

(b)  to  file  any  return  or  furnish  any  information,  books  or  other  documents  within  the  time 
specified therefor in the regulations or bye-laws, fails to file return or furnish the same within the time 
specified  therefor,  he  5[or  who  furnishes  or  files  false,  incorrect  or  incomplete  information,  return, 
report, books or other documents] shall be liable to a penalty 3[which shall not be less than one lakh 
rupees  but  which  may  extend  to  one  lakh  rupees  for  each  day  during  which  such  failure  continues 
subject to a maximum of one crore rupees]; 

(c)  to  maintain  books  of  account  or  records,  fails  to  maintain  the  same,  he  shall  be  liable  to  a 
penalty  3[which shall not be less than one lakh rupees but which may extend to one lakh rupees for 
each day during which such failure continues subject to a maximum of one crore rupees]. 

1. Section 19 numbered as sub-section (1) thereof by Act 13 of 2018, s. 192 (w.e.f. 8-3-2019). 
2. Ins. by Act 27 of 2014,  s. 41 (w.e.f. 8-9-2014). 
3. Ins. by Act 13 of 2018, s. 192 (w.e.f. 8-3-2019). 
4. Ins. by Act 1 of 2005, s. 17 (w.e.f. 12-10-2004). 
5. Ins. by Act 13 of 2018, s. 193 (w.e.f. 8-3-2019). 
6. Subs. by Act 27 of 2014, s. 42, for certain words (w.e.f. 8-9-2014). 

6 

 
                                                           
19B. Penalty for failure to enter into an agreement.—If a depository or participant or any issuer or 
its  agent  or  any  person,  who  is  registered  as  an  intermediary  under  the  provisions  of  section  12  of  the 
Securities  and  Exchange  Board  of  India  Act,  1992  (15  of  1992),  and is  required  under  this  Act  or  any 
rules or regulations, made thereunder, to enter into an agreement, fails to enter into such agreement, such 
depository or participant or issuer or its agent or intermediary shall be liable to a penalty 1[which shall not 
be less than one lakh rupees but which may extend to one lakh rupees for each day during which such 
failure continues subject to a maximum of one crore rupees] for every such failure. 

19C. Penalty for failure to redress investors’ grievances.—If any depository or participant or any 
issuer or its agent or any person, who is registered as an intermediary under the provisions of section 12 
of the  Securities  and  Exchange  Board of India Act, 1992 (15 of 1992), after having been called upon by 
the Board in writing, to redress the grievances of the investors, fails to redress such grievances within the 
time specified by the Board, such depository or participant or issuer or its agents or intermediary shall be 
liable to a penalty 2[which shall not be less than one lakh rupees but which may extend to one lakh rupees 
for each day during which such failure continues subject to a maximum of one crore rupees]. 

19D. Penalty for delay in dematerialisation or issue of certificate of securities.—If any issuer or 
its  agent  or  any  person,  who  is  registered  as  an  intermediary  under  the  provisions  of  section  12  of  the 
Securities  and  Exchange  Board  of  India  Act,  1992  (15  of  1992),  fails  to  dematerialise  or  issue  the 
certificate of securities on opting out of a depository by the investors, within the time specified under this 
Act or regulations or bye-laws made thereunder or abets in delaying the process of dematerialisation or 
issue  the  certificate  of  securities  on  opting  out  of  a  depository  of  securities,  such  issuer  or  its  agent  or 
intermediary  shall  be  liable  to  a  penalty 3[which  shall  not  be  less  than  one  lakh  rupees  but  which  may 
extend to one lakh rupees for each day during which such failure continues subject to a maximum of one 
crore rupees]. 

19E.  Penalty  for  failure  to  reconcile  records.—If  a  depository  or  participant  or  any  issuer  or  its 
agent  or  any  person,  who  is  registered  as  an  intermediary  under  the  provisions  of  section  12  of  the 
Securities  and  Exchange  Board  of  India  Act,  1992  (15  of  1992),  fails  to  reconcile  the  records  of 
dematerialised securities with all the securities issued by the issuer as specified in the regulations, such 
depository or participant or issuer or its agent or intermediary shall be liable to a penalty 4[which shall not 
not be less than one lakh rupees but which may extend to one lakh rupees for each day during which such 
failure continues subject to a maximum of one crore rupees]. 

19F.  Penalty  for  failure  to  comply  with  directions  issued  by  Board  under  section  19  of  the 
Act.—If any person fails to comply with the directions issued by the Board under section 19, within the 
time specified by it, he shall be liable to a penalty 5[which shall not be less than one lakh rupees but which 
which  may  extend  to  one  lakh  rupees  for  each  day  during  which  such  failure  continues  subject  to  a 
maximum of one crore rupees]. 

6[19FA.  Penalty  for  failure  to  conduct  business  in  a  fair  manner.—Where  a  depository  fails  to 
conduct  its  business  with  its  participants  or  any  issuer  or  its  agent  or  any  person  associated  with  the 
securities  markets  in  a  fair  manner  in  accordance  with  the  rules,  regulations  made  by  the  Board  or 
directions issued by the Board under this Act, it shall be liable to penalty which shall not be less than five 
crore rupees but which may extend to twenty-five crore rupees or three times the amount of gains made 
out of such failure, whichever is higher.] 

19G. Penalty for contravention where no separate penalty has been provided.—Whoever fails to 
comply with any provision of this Act, the rules or the regulations or bye-laws made or directions issued 
by the Board thereunder for which no separate penalty has been provided, shall be 7[liable to a penalty 
which shall not be less than one lakh rupees but which may extend to one crore rupees]. 

1. Subs. by Act 27 of 2014, s. 43, for certain words (w.e.f. 8-9-2014).  
2. Subs. by s. 44, ibid., for certain words (w.e.f. 8-9-2014). 
3. Subs. by s. 45, ibid., for certain words (w.e.f. 8-9-2014). 
4. Subs. by s. 46, ibid., for certain words (w.e.f. 8-9-2014). 
5. Subs. by s. 47, ibid., for certain words (w.e.f. 8-9-2014). 
6. Ins. by Act 13 of 2018, s. 194 (w.e.f. 8-3-2019). 
7. Subs. by Act 27 of 2014, s. 48, for certain words  (w.e.f. 28-3-2014). 

7 

 
                                                           
 
19H. Power to adjudicate.—(1) For the purpose of adjudging under sections 19A, 19B, 19C, 19D, 
19E,  1[19F, 19FA and 19G, the Board may] appoint any officer not below the rank of a Division Chief of 
the  Securities  and  Exchange  Board  of  India  to  be  an  adjudicating  officer  for  holding  an  inquiry  in  the 
prescribed  manner  after  giving  any  person  concerned  a  reasonable  opportunity  of  being  heard  for  the 
purpose of imposing any penalty. 

(2) While holding an inquiry, the adjudicating officer shall have power to summon and enforce the 
attendance of any person acquainted with the facts and circumstances of the case to give evidence or to 
produce any document, which in the opinion of the adjudicating officer, may be useful for or relevant to 
the  subject-matter  of  the  inquiry  and  if,  on  such  inquiry,  he  is  satisfied  that  the  person  has  failed  to 
comply  with  the  provisions  of  any  of  the  sections  specified  in  sub-section  (1),  he  may  impose  such 
penalty as he thinks fit in accordance with the provisions of any of those sections. 

2[(3) The Board may call for and examine the record of any proceedings under this section and if it 
considers  that  the  order  passed  by  the  adjudicating  officer  is  erroneous  to  the  extent  it  is  not  in  the 
interests  of  the  securities  market,  it  may,  after  making  or  causing  to  be  made  such  inquiry  as  it  deems 
necessary, pass an order enhancing the quantum of penalty, if the circumstances of the case so justify: 

Provided  that  no  such  order  shall  be  passed  unless  the  person  concerned  has  been  given  an 

opportunity of being heard in the matter: 

Provided  further  that  nothing  contained  in  this  sub-section  shall  be  applicable  after  an  expiry  of  a 
period  of  three  months  from  the  date  of  the  order  passed  by  the  adjudicating  officer  or  disposal  of  the 
appeal under section 23A, whichever is earlier.] 

19-I. 3[Factors to be taken into account while adjudging quantum of penalty].—While adjudging 
adjudging  the  quantum  of  penalty  under  4[section  19  or  section  19H,  the  Board  or  the  adjudicating 
officer] shall have due regard to the following factors,     namely:—  

(a)  the  amount  of  disproportionate  gain  or  unfair  advantage,  wherever  quantifiable,  made  as  a 

result of the default; 

(b) the amount of loss caused to an investor or group of investors as a  result of the default; 

(c) the repetitive nature of the default.  

5[Explanation.—For the removal of doubts, it is clarified that the power of   6*** to adjudge the 
quantum  of  penalty  under  sections  19A  to  19F  shall  be  and  shall  always  be  deemed  to  have  been 
exercised under the provisions of this section.]  

7 [19-IA.  Settlement  of  Administrative  and  Civil  Proceedings.—(1)  Notwithstanding  anything 
contained in any other law for the time being in force, any person, against whom any proceedings have 
been  initiated  or  may  be  initiated  under  section  19  or  section  19H,  as  the  case  may  be,  may  file  an 
application in writing to the Board proposing for settlement of the proceedings initiated or to be initiated 
for the alleged defaults. 

(2) The Board may, after taking into consideration the nature, gravity and impact of defaults, agree to 
the proposal for settlement, on payment of such sum by the defaulter or on such other terms as may be 
determined  by  the  Board  in  accordance  with  the  regulations  made  under  the  Securities  and  Exchange 
Board of India Act, 1992 (15 of 1992).  

(3) For the purpose of settlement under this section, the procedure as specified by the Board under the 

Securities and Exchange Board of India Act, 1992 (15 of 1992) shall apply. 

1. Subs. by Act 13 of 2018, s. 195, for “19F and 19G, the Board shall” (w.e.f. 8-3-2019). 
2. Ins. by Act 27 of 2014, s. 49 (w.e.f. 18-7-2013). 
3. Subs. by Act 13 of 2018, s. 196, for “Factors to be taken into account by adjudicating officer” (w.e.f. 8-3-2019). 
4. Subs. by s. 196, ibid., for “section 19H, the adjudicating officer” (w.e.f. 8-3-2019). 
5. Ins. by Act 7 of 2017, s. 149 (31-3-2017). 
6. The words “of an adjudicating officer” omitted by Act 13 of 2018, s. 196 (w.e.f. 8-3-2019). 
7. Ins. by Act 27 of 2014, s. 50 (w.e.f. 20-4-2007). 

8 

 
                                                           
(4) No appeal shall lie under section 23A against any order passed by the Board or the adjudicating 

officer under this section.] 

1[(5) All settlement amounts, excluding the disgorgement amount and legal costs, realised under this 

Act shall be credited to the Consolidated Fund of India.] 

2[19-IB.  Recovery of amounts.—(1) If a person fails to pay the penalty imposed 3[under this Act] or 
or fails to comply with a direction of disgorgement order issued under section 19 or fails to pay any fees 
due to the Board, the Recovery Officer may draw up under his signature a statement in the specified form 
specifying the amount due from the person (such statement being hereafter in this Chapter referred to as 
certificate) and shall proceed to recover from such person the amount specified in the certificate by one or 
more of the following modes, namely:— 

(a) attachment and sale of the person‟s movable property; 

(b) attachment of the person‟s bank accounts; 

(c) attachment and sale of the person‟s immovable property; 

(d) arrest of the person and his detention in prison; 

(e) appointing a receiver for the management of the person‟s movable and immovable properties,  

and  for  this  purpose,  the  provisions  of  sections  220  to  227,  228A,  229,  232,  the  Second  and  Third 
Schedules to the Income-tax Act, 1961 (43 of 1961), and the Income-tax (Certificate Proceedings) Rules,                           
1962 as in force from time to time, in so far as may be, apply with necessary modifications as if the said 
provisions and the rules thereunder were the provisions of this Act and referred to the amount due under 
this Act instead of to income-tax under the Income-tax Act, 1961. 

Explanation 1.—For the purposes of this sub-section, the person‟s movable or immovable property or 
monies held in bank accounts shall include any property or monies held in bank accounts which has been 
transferred, directly or indirectly on or after the date when the amount specified in certificate had become 
due,  by  the  person  to  his  spouse  or  minor  child  or  son‟s  wife  or  son‟s  minor  child,  otherwise  than  for 
adequate consideration, and which is held by, or stands in the name of, any of the persons aforesaid; and 
so far as the movable or immovable property or monies held in bank accounts so transferred to his minor 
child or his son‟s minor child is concerned, it shall, even after the date of attainment of majority by such 
minor child or son‟s minor child, as the case may be, continue to be included in the person‟s movable or 
immovable  property  or  monies  held  in  bank  accounts  for  recovering  any  amount  due  from  the  person 
under this Act. 

Explanation  2.—Any  reference  under  the  provisions  of  the  Second  and  Third  Schedules  to  the 
Income-tax  Act,  1961  (43  of  1961)  and  the  Income-tax  (Certificate  Proceedings)  Rules,  1962  to  the 
assessee shall be construed as a reference to the person specified in the certificate. 

Explanation  3.—Any  reference  to  appeal  in  Chapter  XVIID  and  the  Second  Schedule  to  the    

Income-tax  Act,  1961  (43  of  1961),  shall  be  construed  as  a  reference  to  appeal  before  the  Securities 
Appellate Tribunal under section 23A of this Act. 

(2)  The  Recovery  Officer  shall  be  empowered  to  seek  the  assistance  of  the  local  district 

administration while exercising the powers under sub-section (1). 

(3) Notwithstanding anything contained in any other law for the time being in force, the recovery of 
amounts  by  a  Recovery  Officer  under  sub-section  (1),  pursuant  to  non-compliance  with  any  direction 
issued by the Board under section 19, shall have precedence over any other claim against such person. 

1. Ins. by Act 13 of 2018, s. 197 (w.e.f. 8-3-2019). 
2. Ins. by Act 27 of 2014,  s. 51 (w.e.f. 18-7-2013). 
3. Subs. by Act 13 of 2018, s. 198, for “by the adjudicating officer” (w.e.f. 8-3-2019). 

9 

 
                                                           
(4) For the purposes of sub-sections (1), (2) and (3), the expression „„Recovery Officer‟‟ means any 
officer of the Board who may be authorised, by general or special order in writing, to exercise the powers 
of a Recovery Officer.] 

1[19-IC.  Continuance  of  proceedings.—(1)  Where  a  person  dies,  his  legal  representative  shall  be 
liable to pay any sum which the  deceased would have been liable to pay if he had not died, in the like 
manner and to the same extent as the deceased: 

Provided that, in case of any penalty payable under this Act, a legal representative shall be liable only 

in case the penalty has been imposed before the death of the deceased person. 

(2) For the purposes of sub-section (1),— 

(a)  any  proceeding  for  disgorgement,  refund  or  an  action  for  recovery  before  the  Recovery 
Officer under this Act, except a proceeding for levy of penalty, initiated  against the deceased before 
his  death  shall  be  deemed  to  have  been  initiated  against  the  legal  representative,  and  may  be 
continued against the legal representative from the stage at which it stood on the date of the death of 
the deceased and all the provisions of this Act shall apply accordingly; 

(b)  any  proceeding  for  disgorgement,  refund  or  an  action  for  recovery  before  the  Recovery 
Officer  under  this  Act,  except  a  proceeding  for  levy  of  penalty,  which  could  have  been  initiated 
against the deceased if he had survived, may be initiated against the legal representative and all the 
provisions of this Act shall apply accordingly. 

(3) Every legal representative shall be personally liable for any sum payable by him in his capacity as 
legal representative if, while his liability for such sum remains undischarged, he creates a charge on or 
disposes  of  or  parts  with  any  assets  of  the  estate  of  the  deceased,  which  are  in,  or  may  come  into,  his 
possession, but such liability shall be limited to the value of the asset so charged, disposed of or parted 
with. 

(4) The liability of a legal representative under this section shall be limited to the extent to which the 

estate of the deceased is capable of meeting the liability. 

Explanation.—For  the  purposes  of  this  section  “legal  representative”  means  a  person  who  in  law 
represents the estate of a deceased person, and includes any person who intermeddles with the estate of 
the  deceased  and  where  a  party  sues  or  is  sued  in  a  representative  character,  the  person  on  whom  the 
estate devolves on the death of the party so suing or sued.] 

19J.  Crediting  sums  realised  by  way  of  penalties  to  Consolidated  Fund  of  India.—All  sums 

realised by way of penalties under this Act shall be credited to the Consolidated Fund of India.] 

CHAPTER V 

2[MISCELLANEOUS] 

3[20.  Offences.—(1)  Without  prejudice to  any  award of  penalty  by  the  adjudicating  officer 4[or  the 
Board] under this Act, if any person contravenes or attempts to contravene or abets the contravention of 
the  provisions  of  this  Act  or  of  any  rules  or  regulations  or  bye-laws  made  thereunder,  he  shall  be 
punishable with imprisonment for a term which may extend to ten years, or with fine, which may extend 
to twenty-five crore rupees, or with both. 

(2) If any person fails to pay the penalty imposed by the 5[adjudicating officer or the Board or fails to 
comply with any] directions or orders, he shall be punishable with imprisonment for a term which shall 
not be less than one month but which may extend to ten years, or with fine, which may extend to twenty-
five crore rupees, or with both.] 

1. Ins. by Act 13 of 2018, s. 199 (w.e.f. 8-3-2019). 
2. Subs. by s. 200, ibid.., for “PENALTY” (w.e.f. 8-3-2019). 
3. Subs. by Act 1 of 2005, s. 18, for section 20 (w.e.f. 12-10-2004). 
4. Ins. by Act 13 of 2018, s. 201 (w.e.f. 8-3-2019). 
5. Subs. by s. 201, ibid., for “adjudicating officer or fails to comply with any of his” (w.e.f. 8-3-2019). 

10 

 
                                                           
21. 1[Contravention  by  companies].—(1)  Where 2[a  contravention  of any  of  the provisions  of  this 
Act or any rule, regulation, direction or order made thereunder] has been committed by a company, every 
person who at the time the 3[contravention] was committed was in charge of, and was responsible to, the 
company for the conduct of the business of the company, as well as the company, shall be deemed to be 
guilty of the 3[contravention] and shall be liable to be proceeded against and punished accordingly: 

Provided  that  nothing  contained  in  this  sub-section  shall  render  any  such  person  liable  to  any 
punishment provided in this Act, if he proves that the offence was committed without his knowledge or 
that he had exercised all due diligence to prevent the commission of such offence. 

(2)  Notwithstanding  anything  contained  in  sub-section  (1),  where  2[a  contravention  of  any  of  the 
provisions  of  this  Act  or  any  rule,  regulation,  direction  or  order  made  thereunder]  this  Act  has  been 
committed by a company and it is proved that the  3[contravention] has been committed with the consent 
or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other 
officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty 
of the 3[contravention] and shall be liable to be proceeded against and punished accordingly. 

Explanation.—For the purposes of this section,— 

(a) “company” means any body corporate and includes a firm or other association of individuals; 

and 

(b) “director”, in relation to a firm, means a partner in the firm. 

[CHAPTER VI.—MISCELLANEOUS] Omitted by the Finance Act, 2018 (13 of 2018), s. 203 (w.e.f. 8-3-
2019).] 

4 [22.  Cognizance  of  offences  by  courts.—(1)  No  court  shall  take  cognizance  of  any  offence 
punishable under this Act or any rules or regulations or bye-laws made thereunder, save on a complaint 
made by the Central Government or State Government or the Securities and Exchange Board of India or 
by any person. 

* 

5* 
22A.  Composition  of  certain  offences.—Notwithstanding  anything  contained  in  the  Code  of 
Criminal  Procedure,  1973  (2  of  1974),  any  offence  punishable  under  this  Act,  not  being  an  offence 
punishable with imprisonment only, or with imprisonment and also with fine, may either before or after 
the  institution  of  any  proceeding,  be  compounded  by  a  Securities  Appellate  Tribunal  or  a  court  before 
which such proceedings are pending. 

* 

* 

* 

22B.  Power  to  grant  immunity.—(1)  The  Central  Government  may,  on  recommendation  by  the 
Board, if the Central Government is satisfied, that any person, who is alleged to have violated any of the 
provisions of this Act or the rules or the regulations made thereunder, has made a full and true disclosure 
in  respect  of  alleged  violation,  grant  to  such  person,  subject  to  such  conditions  as  it  may  think  fit  to 
impose, immunity from prosecution for any offence under this Act, or the rules or the regulations made 
thereunder or also from the imposition of any penalty under this Act with respect to the alleged violation: 
Provided  that  no  such  immunity  shall  be  granted  by  the  Central  Government  in  cases  where  the 
proceedings  for  the  prosecution  for  any  such  offence  have  been  instituted  before  the  date  of  receipt  of 
application for grant of such immunity: 

Provided further that recommendation of the Board under this sub-section shall not be binding upon 

the Central Government. 

(2)  An  immunity  granted to  a  person  under  sub-section  (1)  may,  at  any  time,  be  withdrawn  by  the 
Central Government, if it is satisfied that such person had, in the course of the proceedings, not complied 
with the condition on which the immunity was granted or had given false evidence, and thereupon such 
person  may  be  tried  for  the  offence  with  respect  to  which  the  immunity  was  granted  or  for  any  other 
offence  of  which  he  appears  to  have  been  guilty  in  connection  with  the  contravention  and  shall  also 

1. Subs. by Act 13 of 2018, s. 202, for “Offences by companies” (w.e.f. 8-3-2019). 
2. Subs. by s. 202, ibid., for “an offence under this Act” (w.e.f. 8-3-2019). 
3. Subs. by s. 202, ibid., for “offence” (w.e.f. 8-3-2019). 
4. Subs. by Act 1 of 2005, s. 19, for section 22 (w.e.f.  12-10-2004). 
5. Sub-section (2) omitted by Act 27 of 2014, s. 52 (w.e.f.  18-7-2013). 

11 

 
 
 
 
 
 
 
 
 
                                                           
become  liable  to  the  imposition  of  any  penalty  under  this  Act  to  which  such  person  would  have  been 
liable, had not such immunity been granted.] 

1[22C.  Establishment  of  Special  Courts.—(1)  The  Central  Government  may,  for  the  purpose  of 
providing speedy trial of offences under this Act, by notification, establish or  designate as many Special 
Courts as may be necessary. 

(2) A Special Court shall consist of a single judge who shall be appointed by the Central Government 
with  the  concurrence  of  the  Chief  Justice  of  the  High  Court  within  whose  jurisdiction  the  judge  to  be 
appointed is working. 

(3)  A  person  shall  not  be  qualified  for  appointment  as  a  judge  of  a  Special  Court  unless  he  is, 
immediately before such appointment, holding the office of a Sessions Judge or an Additional Sessions 
Judge, as the case may be. 

22D.  Offences  triable  by  Special  Courts.—Notwithstanding  anything  contained  in  the  Code  of 
Criminal  Procedure,  1973  (2  of  1974),  all  offences  under  this  Act  committed  prior  to  the  date  of 
commencement  of the  Securities  Laws (Amendment)  Act,  2014  (27  of  2014)  or  on  or after  the date of 
such commencement, shall be taken cognizance of and tried by the Special Court established for the area 
in which the offence is committed or where there are more Special Courts than one for such area, by such 
one of them as may be specified in this behalf by the High Court concerned. 

22E.  Appeal  and  revision.—The  High  Court  may  exercise,  so  far  as  may  be  applicable,  all  the 
powers conferred by Chapters XXIX and XXX of the Code of Criminal Procedure, 1973 (2 of 1974) on a 
High Court, as if a Special Court within the local limits of the jurisdiction of the High Court were a Court 
of Session trying cases within the local limits of the jurisdiction of the High Court. 

22F. Application of Code to proceedings before Special Court.—(1) Save as otherwise provided in 
this  Act,  the  provisions  of  the  Code  of  Criminal  Procedure,  1973  (2  of  1974)  shall  apply  to  the 
proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be 
deemed to be a Court of Session and the person conducting prosecution before a Special Court shall be 
deemed to be a Public Prosecutor within the meaning of clause (u) of section 2 of the Code of Criminal 
Procedure, 1973. 

(2) The person conducting prosecution referred to in sub-section (1) should have been in practice as 
an advocate for not less than seven years or should have held a post, for a period of not less than seven 
years, under the Union or a State, requiring special knowledge of law. 

22G. Transitional provisions.—Any offence committed under this Act, which is triable by a Special 
Court shall, until a Special Court is established, be taken cognizance of and tried by a Court of Session 
exercising  jurisdiction  over  the  area,  notwithstanding  anything  contained  in  the  Code  of  Criminal 
Procedure, 1973 (2 of 1974): 

Provided that nothing contained in this section shall affect the powers of the High Court under section 
407 of the Code to transfer any case or class of cases taken cognizance by a Court of Session under this 
section.] 

23. Appeals.—(1) Any person aggrieved by 2[an order of the Board made before the commencement 
of the Securities Laws (Second Amendment) Act, 1999 (32 of 1999)] under this Act, or the regulations 
made thereunder may prefer an appeal to the Central Government within such time as may be prescribed. 

(2) No appeal shall be admitted if it is preferred after the expiry of the period prescribed therefor: 

Provided  that  an  appeal  may  be  admitted  after  the  expiry  of  the  period  prescribed  therefor  if  the 
appellant satisfies the Central Government that he had sufficient cause for not preferring the appeal within 
the prescribed period. 

(3) Every appeal made under this section shall be made in such form and shall be accompanied by a 

copy of the order appealed against and by such fees as may be prescribed. 

1. Ins. by Act 27 of 2014, s. 53 (w.e.f. 18-7-2013). 
2. Subs. by Act 32 of 1999, s. 14, for “an order of the Board made” (w.e.f.16-12-1999). 

12 

 
                                                           
 (4) The procedure for disposing of an appeal shall be such as may be prescribed: 

Provided that before disposing of an appeal, the appellant shall be given a reasonable opportunity of 

being heard. 

1[23A.  Appeal  to  Securities  Appellate  Tribunal.—(1)  Save  as  provided  in  sub-section  (2),  any 
person aggrieved by an order of the Board made, on and after the commencement of the Securities Laws 
(Second  Amendment)  Act,  1999  (32  of  1999),  under  this  Act,  or  the  regulations  made  thereunder,           
2[or  by  an  order  made  by  an  adjudicating  officer  under  this  Act]  may  prefer  an  appeal  to  a  Securities 
Appellate Tribunal having jurisdiction in the matter. 

3* 

* 

* 

* 

* 

(3) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date 
on which a copy of the order made by the Board is received by the person referred to in sub-section (1) 
and it shall be in such form and be accompanied by such fees as may be prescribed: 

Provided that the Securities Appellate Tribunal may  entertain an appeal after the expiry of the said 

period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period. 

(4) On receipt of an appeal under sub-section (1), the Securities Appellate Tribunal may, after giving 
the  parties  to  the  appeal  an  opportunity  of  being  heard,  pass  such  orders  thereon  as  it  thinks  fit, 
confirming, modifying or setting aside the order appealed against. 

(5) The Securities Appellate Tribunal shall send a copy of every order made by it to the Board and 

parties to the appeal. 

(6) The appeal filed before the Securities Appellate Tribunal under sub-section (1) shall be dealt with 
by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within 
six months from the date of receipt of the appeal. 

23B.  Procedure  and  powers  of  Securities  Appellate  Tribunal.—(1)  The  Securities  Appellate 
Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), 
but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and 
of  any  rules,  the  Securities  Appellate  Tribunal  shall  have  powers  to  regulate  their  own  procedure 
including the places at which they shall have their sittings. 

(2) The Securities Appellate Tribunal shall have, for the purpose of discharging their functions under 

this  Act,  the  same  powers  as  are  vested  in  a  civil  court  under  the  Code  of  Civil  Procedure,                       
1908 (5 of 1908), while trying a suit in respect of the following matters, namely:— 

(a) summoning and enforcing the attendance of any person and  examining him on oath; 

(b) requiring the discovery and production of documents; 

(c) receiving evidence on affidavits; 

(d) issuing commissions for the examination of witnesses or documents; 

(e) reviewing its decisions; 

(f) dismissing an application for default or deciding it ex parte; 

(g) setting aside any order of dismissal of any application for default or any order passed by it          

ex parte; and 

(h) any other matter which may be prescribed. 

(3)  Every  proceeding  before  the  Securities  Appellate  Tribunal  shall  be  deemed  to  be  a  judicial 
proceeding within the meaning of sections 193 and 228, and for the purposes of section 196 of the Indian 

1. Ins. by Act 32 of 1999, s. 15 (w.e.f. 16-12-1999). 
2. Ins. by Act 1 of 2005, s. 20 (w.e.f. 12-10-2004). 
3. Sub-section (2) omitted by Act 27 of 2014, s. 54 (w.e.f 18-7-2013). 

13 

 
 
 
 
 
 
 
 
 
                                                           
 
Penal Code (45 of 1860) and the Securities Appellate Tribunal shall be deemed to be a civil court for all 
the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974). 

23C. Right to legal representation.—The appellant may either appear in person or authorise one or 
more chartered accountants or company secretaries or cost accountants or legal practitioners or any of its 
officers to present his or its case before the Securities Appellate Tribunal. 

Explanation.—For the purposes of this section,—  

 (a)  “chartered  accountant”  means  a  chartered  accountant  as  defined  in  clause  (b)  of                        

sub-section (1) of section 2 of Chartered Accountants  Act, 1949 (38 of 1949) and who has obtained a 
certificate of practice under sub-section (1) of section 6 of that Act; 

(b) “company secretary” means a company secretary as defined in clause (c) of sub-section (1) of 
section 2 of  the  Company Secretaries Act, 1980 (56 of 1980) and who has obtained a certificate of 
practice under sub-section (1) of section 6 of that Act; 

(c)  “cost  accountant”  means  a  cost  accountant  as  defined  in  clause  (b)  of  sub-section  (1)  of 
section 2 of Cost and Works Accountants Act, 1959 (23 of 1959) and who has obtained a certificate 
of practice under sub-section (1) of section 6 of that Act; 

(d) “legal practitioner” means an advocate, vakil or an attorney of any High Court, and includes a 

pleader in practice. 
23D. Limitation.—The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be, 

apply to an appeal made to a Securities Appellate Tribunal. 

23E.  Civil  court  not  to  have  jurisdiction.—No  civil  court  shall  have jurisdiction  to  entertain any 
suit  or  proceeding  in  respect  of  any  matter  which  a  Securities  Appellate  Tribunal  is  empowered  by  or 
under this Act to determine and no injunction shall be granted by any court or other authority in respect of 
any action taken or to be taken in pursuance of any power conferred by or under this Act. 

1[23F. Appeal to Supreme Court.—Any person aggrieved by any decision or order of the Securities 
Appellate  Tribunal  may  file  an  appeal  to  the  Supreme  Court  within  sixty  days  from  the  date  of 
communication  of the  decision  or  order  of the  Securities  Appellate Tribunal to him  on  any  question of 
law arising out of such order: 

Provided that the Supreme Court may, if it is satisfied that the appellant was prevented by sufficient 
cause  from  filing  the  appeal  within  the  said  period,  allow  it  to  be  filed  within  a  further  period  not 
exceeding sixty days.]] 

2 [23G.  Powers  of  Board  not  to  apply  to  International  Financial  Services    Centre.—
Notwithstanding anything contained in any other law for the time being in force, the powers exercisable 
by the Board under this Act,— 

(a) shall not extend to an International Financial Services Centre set up under sub-section (1) of 

section 18 of the Special Economic Zones Act, 2005 (28 of 2005); 

(b)  shall  be  exercisable  by  the  International  Financial  Services  Centres  Authority  established 
under sub-section (1) of section 4 of the International Financial Services Centres Authority Act, 2019,  
in so far as regulation of financial products, financial services and financial institutions that are permitted 
in the International Financial Services Centres are concerned.] 

24.  Power  of  Central  Government  to  make  rules.—(1)  The  Central  Government  may,  by 

notification in the Official Gazette, make rules for carrying out the provisions of this Act.  

(2)  In  particular,  and  without  prejudice  to  the  generality  of  the  foregoing  power,  such  rules  may 

provide for all or any of the following matters, namely:— 

3[(a) the manner of inquiry under sub-section (1) of section 19H; 

(aa) the time within which an appeal may be preferred under sub-section (1) of section 23;] 

(b) the form in which an appeal may be preferred under sub-section (3) of section 23 and the fees 

payable in respect of such appeal; 

(c) the procedure for disposing of an appeal under sub-section (4) of section 23; 

1. Subs. by Act 1 of 2005, s. 21, for section 23F (w.e.f. 12-10-2004). 
2. Ins. by Act 50 of 2019, s. 33 and the second Schedule (w.e.f. 1-10-2020). 
3. Subs. by Act 1 of 2005, s. 22, for clause (a) (w.e.f. 12-10-2004). 
14 

 
 
                                                           
1[(d) the form in which an appeal may be filed before the Securities Appellate Tribunal under 

section 23A and the fees payable in respect of such appeal.] 

25.  Power  of  Board  to  make  regulations.—(1)  Without  prejudice  to  the  provisions  contained  in 
section  30  of  the  Securities  and  Exchange  Board  of  India  Act,  1992  (15  of  1992),  the  Board  may,  by 
notification  in  the  Official Gazette,  make  regulations consistent  with  the  provisions  of  this  Act and the 
rules made thereunder to carry out the purposes of this Act. 

(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may 

provide for—  

(a) the form in which record is to be maintained under clause (i) of sub-section (1) of section 2; 

(b)  the  form  in  which  the  certificate  of  commencement  of  business  shall  be  issued  under                    

sub-section (2) of section 3;  

(c) the manner in which the certificate of security shall be surrendered under sub-section (1) of 

section 6; 

(d) the manner of creating a pledge or hypothecation in respect of security owned by a beneficial 

owner under sub-section (1) of section 12; 

(e) the conditions and the fees payable with respect to the issue of certificate of securities under           

sub-section (3) of section 14; 

(f) the rights and obligations of the depositories, participants and the issuers under sub-section (1) 

of section 17; 

(g) the eligibility criteria for admission of securities into the depository  under sub-section (2) of 

section 17; 

2[(h)  the terms  determined by  the  Board  for  settlement  of  proceedings  under  sub-section  (2)  of 

section 19-IA; 

(i) any other matter which is required to be, or may be, specified by regulations or in respect of 

which provision to be made by regulations.] 

26. Power of depositories to make bye-laws.—(1) A depository shall, with the previous approval of 

the Board, make bye-laws consistent with the provisions of this Act and the regulations. 

(2) In particular, and without prejudice to the generality of the foregoing power, such bye-laws shall 

provide for— 

(a) the eligibility criteria for admission and removal of securities in the depository; 

(b) the conditions subject to which the securities shall be dealt with; 

(c) the eligibility criteria for admission of any person as a participant; 

(d) the manner and procedure for dematerialisation of securities; 

(e) the procedure for transactions within the depository; 

(f) the manner in which securities shall be dealt with or withdrawn from a depository; 

(g)  the  procedure  for  ensuring  safeguards  to  protect  the  interests  of  participants  and  beneficial 

owners; 

(h) the conditions of admission into and withdrawal from a participant by a beneficial owner; 

(i) the procedure for conveying information to the participants and beneficial owners on dividend 

declaration, shareholder meetings and other matters of interest to the beneficial owners; 

(j)  the  manner  of  distribution  of  dividends,  interest  and  monetary  benefits  received  from  the 

company among beneficial owners; 

1. Ins. by Act 32 of 1999, s. 16 (w.e.f. 16-12-1999). 
2. Ins. by Act 27 of 2014, s. 55 (w.e.f. 18-7-2013). 

15 

 
                                                           
(k) the manner of creating pledge or hypothecation in respect of securities held with a depository; 

(l)  inter  se  rights  and  obligations  among  the  depository,  issuer,  participants  and  beneficial 

owners; 

(m)  the  manner  and  the  periodicity  of  furnishing  information  to  the  Board,  issuer  and  other 

persons; 

(n)  the  procedure  for  resolving  disputes  involving  depository,  issuer,  company  or  a  beneficial 

owner; 

(o) the procedure for proceeding against the participant committing breach of the regulations and 
provisions  for  suspension  and  expulsion  of  participants  from  the  depository  and  cancellation  of 
agreements entered with the depository; 

(p) the internal control standards including procedure for auditing, reviewing and monitoring. 

(3) Where the Board considers it expedient so to do, it may, by order in writing, direct a depository to 
make  any  bye-laws  or  to  amend  or  revoke  any  bye-laws  already  made  within  such  period  as  it  may 
specify in this behalf. 

(4) If the depository fails or neglects to comply with such order within the specified period, the Board 
may make the bye-laws or amend or revoke the bye-laws made either in the form specified in the order or 
with such modifications thereof as the Board thinks fit. 

27.  Rules  and  regulations  to  be  laid  before  Parliament.—Every  rule  and  every  regulation  made 
under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it 
is in session, for a total period of thirty days which may be comprised in one session or in two or more 
successive  sessions,  and  if,  before  the  expiry  of  the  session  immediately  following  the  session  or  the 
successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or 
both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter 
have effect only in such modified form or be of no effect, as the case may be; so, however, that any such 
modification or annulment shall be without prejudice to the validity of anything previously done under 
that rule or regulation. 

28. Application of other laws not barred.—The provisions of this Act shall be in addition to, and 
not  in  derogation  of,  any  other  law  for  the  time  being  in  force  relating  to  the  holding  and  transfer  of 
securities. 

29. Removal of difficulties.—(1) If any difficulty arises in giving effect to the provisions of this Act, 
the  Central  Government  may,  by  order  published  in  the  Official  Gazette,  make  such  provisions  not 
inconsistent with the provisions of this Act as appear to it to be necessary or expedient for removing the 
difficulty: 

Provided that no order shall be made under this section after the expiry of a period of two years from 

the commencement of this Act. 

(2) Every order made under this section shall be laid, as soon as may be after it is made, before each 

House of Parliament. 

30.  [Amendments  to  certain  enactments.]  Rep.  by  the  Repealing  and  Amending  Act,  2001                           

(30 of 2001), s. 2 and the First Schedule (w.e.f. 3-9-2001). 

1[30A. Validation of certain acts.— Any act or thing done or purporting to have been done under the 
principal Act, in respect of settlement of administrative and civil proceedings, shall, for all purposes, be 
deemed to be valid and effective as if the amendments made to the principal Act had been in force at all 
material times.] 

31. Repeal and saving.—(1) The Depositories (Third) Ordinance, 1996 (Ord. 28 of 1996) is hereby 

repealed. 

1. Ins. by Act 27 of 2014, s. 56 (w.e.f. 18-7-2013). 

16 

 
                                                           
(2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall be 

deemed to have been done or taken under the corresponding provisions of this Act. 

[THE SCHEDULE.]—Rep. by the Repealing and Amending Act, 2001 (30 of 2001), s. 2 and the First 

Schedule (w.e.f. 3-9-2001). 

17 

 
